GCC

Bahrain on the rise

by Executive Contributor
written by Executive Contributor

Island economy booming

In the build up to November 25 parliamentary elections, Bahrainis’ attention has been focused on the state of the kingdom’s economy—and wrenching social changes to the kingdom’s gender balance in government.
In the social arena, Bahrain will have its first female deputy after the election. This is known before a single ballot has been cast, given that Lateefa al-Geood is unchallenged in her bid for a seat in parliament. Reformists have broadly welcomed her accomplishment, but some women’s activists have expressed some discomfort given the way in which she will win her seat.
On the economic front, the recently-published World Investment Report 2006 indicated that last year, Bahrain had the fourth-highest outflows of foreign direct investment (FDI) of any country in the West Asian region.
With over $1 billion in outflow for the kingdom, only the UAE, Kuwait and Saudi Arabia recorded higher outward FDI. This placed the kingdom within the overall pattern of FDI behavior in the Middle East and Gulf Cooperation Council (GCC) areas. Receipts from hydrocarbons are increasingly being used by Gulf economies to invest in projects that aim to diversify the economy. The result is not only internal investment, but also regional and beyond, with Asia and Africa benefiting from much of the Gulf’s FDI.
In all, GCC outflows more than doubled in 2004-2005.

Money flows out, flows in
At the same time, the GCC’s booming economies have continued to be major recipients of FDI. The same report showed that of the Gulf States, the UAE and Saudi Arabia attracted the highest volume of inward investment, followed by Turkey. The UAE pulled some $12 billion in 2005, while the Saudis received some $4.6 billion. Somewhat surprisingly, the Turks blew away a history of poor past performance in FDI by attracting some $9.7 billion. These three economies attracted more than 75% of the West Asian area’s total FDI inflow. The figure on inflows for West Asia rose 85% year-on-year.
The other interesting factor that became visible in 2005 was the importance of FDI to gross fixed capital formation in the Gulf. In the West Asian region overall, 15% of this formation was due to FDI, making the region a bigger draw for foreign investment than both Asia and Oceania for the first time ever.
Much of this inflow was in service-sector industries, such as finance and telecoms. Yet it has also been good news for local projects hoping to arouse foreign interest in other areas.
As an example, one of Bahrain’s largest real estate projects, the Bahrain Investment Wharf (BIW), recently announced that it had signed a dredging and land reclamation supervision contract with Dar Al-Handasah Consultants-Shair and Partners. This came after BIW had assigned the task of carrying out the dredging work to Great Lakes Dredge and Dock Company.

Unique privately-owned project
When completed, BIW will be a mixed-use estate, featuring industrial, business, logistics, warehousing, commercial and residential property. Built on around 1.7 million m2, it will be the only privately owned, operated and managed project of its kind in the country. The project is currently a public private partnership (PPP) between the Bahraini Ministry of Trade and Tameer.
The project runs through several phases, with the award of the Great Lakes contract signalling the completion of a major stage in the plan.
The reclamation work on 55% of the remaining land of the Bahrain Investment Wharf will be completed in about 11 months, BIW chairman Ahmed al-Qattan told reporters on October 14.
A number of different complexes will be developed on the new land, with the industrial park expected to house light, medium and convertible industries. The services complex will see transport, cargo and storage investors as well as other support companies. A logistic base and residential and commercial quarters will also be provided to help lure international firms operating in transport and warehousing.

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GCC

Power talks

by Executive Contributor
written by Executive Contributor

Qatari-Indian ties to deepen

In its push to diversify its economy and expand investment and business activities abroad, Qatar is reaching out to India – and India is reaching back.
Within the past month there has been much activity in Qatari-Indian business relations, some in the more traditional field of energy but also in finance and other non-oil related sectors. Qatar has long had close ties with the Indian economy, being the country’s largest single supplier of gas, a position that is set to expand. India, too, is home to many of the migrant workers employed in Qatar, whose remittances are a major source of cash for the Indian economy.
With the growth of India’s economy into a global powerhouse, and Qatar’s drive to spread its economic wings, the relationship is set to deepen. Bilateral trade between India and Qatar has an estimated value of just $1 billion, the majority represented by the export of $690 million worth of Qatari liquid natural gas (LNG).
In mid-October, the Qatar National Bank announced it was seeking to break into the Indian market: “Entry is difficult but we are looking at different options for entry into India,” said Ali Shareef al-Emadi, the bank’s acting chief executive in October, adding that the move was part of a wider expansion plan for the bank.

Looking for options
In early October, another door opened for Qatari investment in India, with the country’s National Thermal Power Corporation offering the Qatar Investment Authority a 40% stake in its gas-fired power project in the state of Kerala. NTPC is planning a major expansion of its plant there, lifting capacity from 350MW to 1,950MW, and it is looking for partners; Qatar, as India’s leading gas supplier, is a natural choice.
The proposal came only a week after a call for Qatar to buy a stake in Indian gas company Petronet. Following a meeting with Qatar’s finance minister, Yusuf Hussain Kamal, Petronet’s managing director said that he had proposed Qatar buy a stake of up to 12.5% in the company through a soon-to-be-floated $100 million foreign currency convertible bond issue. A delegation of officials from the Qatar Investment Agency will visit India shortly to look into the proposal.

Long-term agreement
India has also announced that it is seeking a further long-term agreement with Qatar to provide an additional 10 million tons of LNG annually, starting from 2010, yet another fillip to Qatar’s strongly performing energy export trade.
In mid-September, on the sidelines of the Non-Aligned Summit in Havana, Qatar’s Crown Prince Sheikh Tamim bin Hamad Al Thani met with Indian Prime Minister Manmohan Singh, with the focus of talks being further direct Qatari involvement in the Indian economy.
Though the full details of the discussions were not made public, a statement following the meeting said that Qatar was considering investments in India’s infrastructure and energy sectors. Likewise, India is considering opportunities in Qatar’s construction, transport, communication, oil-related service industries, IT, education and banking sectors.
However, there is a sticking point with Qatar’s desire to become more deeply involved in India’s economy, said al-Emad: India has only just begun opening up its market to overseas banks and financial institutions.
An example of this is Doha Bank’s application to operate in India, which has been held up at the Reserve Bank of India since last year. It is important for India to further liberalize policies to promote trade to the maximum, said Doha Bank Deputy Chief Executive Officer R. Seetharaman.
India must look at the bigger picture, he said. Since funds are required for infrastructure development, financial institutions and banks must be allowed to come in to speed up the process.
In many ways, Qatar and India are natural business partners. Both are looking to expand their economies, with the emirate having cash to invest and India actively seeking investment. Qatar already has a strong position in the Indian energy sector as a major supplier—a position that appears set to be consolidated as India’s demand for gas expands along with its economy. If India lowers a few more barriers in its financial sector, the distance between these two countries will narrow further.

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Levant

Visiting Syria

by Executive Editors
written by Executive Editors

Historical
investment

No doubt inspired by the growth of tourism in Lebanon, Syria has launched a concerted push to promote itself as a tourist destination by cashing in on its abundance of natural and historical sites to attract foreign visitors—and their currencies.
According to Syria’s tourism ministry, 3.4 million foreigners visited the country in 2005, a figure Damascus wants to see reach 7 million by the end of the decade. Investments in the tourism sector rose from $100 million in 2003 to $800 million by the end of last year, again a figure Damascus wants to see more than double in the coming years.
As an incentive to investors, the Syrian government has set out an attractive build-operate-transfer (BOT) scheme, with lease terms of up to 99 years. The government has waived a number of taxes formerly applied to investments in the tourism industry, including stamp duty on contracts. It has also cut the time and complexity needed for applications to make investments in the sector and identified 82 sites to be set aside for tourism development. Further incentives include tax holidays for investors for the first seven years of operation and tax cuts of up to 50% from the eighth year onwards.
The government has also given a commitment that it will boost infrastructure in areas listed as being of high tourism potential and upgrade the quality of services provided at sites of interest to visitors.

Facing challenges
However, Syria’s tourism industry does face a number of challenges. Compared to some of its neighbors, it does not have the number of high-end resorts and facilities needed to cater to the well-heeled visitors who are increasingly becoming the focus of the market. Damascus is attempting to redress this deficiency by actively seeking out foreign, and especially Arab, capital inflow to help the industry blossom.
In the past months, Syria has been wooing Arab investors, with more than a little success. Leading the charge has been Sadallah Agha al-Qala, the minister of tourism, who has been touting both the country’s tourism potential and the increasing ease and attractiveness of doing business in the country.
“The Syrian government has opened the way for scores of tourist sites that achieve economic and tourist feasibility in addition to issuing a large number of decisions and decrees which encourage the launching of new tourist projects,” the minister was quoted as saying to a delegation from Iran’s Amiran Group for Investment in late September.
Amiran’s chairman, Hasan Akhondi, said his group was looking into setting up a tourism resort complex on the Mediterranean coast near Lattakia that would include hotels, chalets and associated facilities. Though still in the negotiation stage, Akhondi said Damascus’ new measures to encourage investment in tourism were encouraging.

Regional interest
The Iranian interest in Syria, and especially around Lattakia, has been mirrored by other investors from the region, with Kuwaiti company al-Nour looking into launching a major development on the shores of the nearby November 16 Lake. In September, representatives of Qatari tourism developer al-Diyyar signed a memorandum of understanding with the Syrian government to invest $250 million in a new coastal project at Ibn Hani, which will include a five-star hotel, villas and chalets, a shopping complex and eateries, to be built on an area of 220,000 m2.
Naser al-Ansari, Al-Diyyar’s executive director, said that the Ibn Hani project would not be the last his firm would invest in, but rather the first of many.
These are only some of the new projects coming on line. According to Fareed Karima, Syria’s director of tourism projects, there has been a growing interest in the country’s tourism sector. In a press statement released in early September, Karima said 51 investors had made bids on 18 of the tourism sites identified by the government. The total value of these bids alone added up to $500 million.
The last three years have seen a constant 6% increase in foreign arrivals, with receipts growing apace. Having already taken steps to liberalize the sector and encourage investment, Syria is looking to build on its newly laid solid foundations.

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Society

Samsung’s growth in Middle East – CE giant hopes to expand its brand

by Nicholas Noe
written by Nicholas Noe

This September in Berlin, in his keynote address at IFA 2006, the world’s largest consumer electronics exhibition, Samsung President and CEO Gee Sung Choi reviewed the tremendous success enjoyed by his company over the past few years and highlighted several exciting new developments on Samsung’s horizon. With 2005 parent company sales of $56.7 billion and net income of $7.5 billion, and powered by a staff of approximately 128,000 people in 57 countries, Samsung has rapidly risen to the position of global powerhouse, leaping from 34th place in Interbrand’s 2005 ranking of global brands (based on brand equity) to 20th place in 2006. (To give some more perspective, parent company sales in 2001 were valued at $24.4 billion, and net profit at $2.2 billion—values that more than doubled and tripled, respectively, by 2005.)

Leadership matters

Mr. Choi’s leadership has played a large role in these impressive strides; in his speech, Choi recalled his comments at IFA 2003, when he coined the term “digital renaissance,” predicting the growth of the consumer electronics industry and a global transition towards digital technology that have since been realized. With this in mind, his concept for the next step in the “digital renaissance,” an era of “rich digital experiences,” carries extra weight; delivering such experiences to end consumers will play a key role in Samsung’s strategy for further consolidating its market leadership.

Although the Middle East is not Samsung’s largest market, it is one of its fastest-growing, and is poised to play an increasingly significant role in the company’s global strategy. In terms of brand power, Samsung is the #3 consumer electronics company in the Middle East and Africa region, with a high level of brand awareness and overwhelmingly positive consumer feedback.

Headquartered in Dubai, Samsung Middle East and Africa (MEA) operates through ten branches and two subsidiaries in the region, with a permanent workforce of 434 employees. Although the brand’s leadership position is more recent, Samsung has a 20-year history in the Middle East.

MEA is no exception to Samsung’s global growth trend, and represents one of company’s fastest-growing markets along with South East Asia, Latin America, Europe and China. Since 2001, average annual revenue growth has been 24%, with 2005 revenues for MEA reaching $2.5 billion. According to MEA Corporate Marketing Manager Haris Munif, expected growth for 2006 is 18-20%, with expected revenues for the year as high as $2.9 billion.

“Our sales and growth rates in the MEA region are very much on track with other markets,” notes Munif. “In absolute terms, Samsung MEA contributes approximately 5% to global sales. Sales contribution is higher in some other markets as they are huge customers of Samsung B2B products like LCD screens and semiconductors.”

Samsung’s best-sellers in the MEA market reflect the diversity of the company’s offerings. According to Munif, AV (in particular, their flagship ‘Bordeaux’ LCD TV, which is a regional market leader) and home appliances have proven some of Samsung MEA’s strongest categories, along with the mobile phone sector—where Samsung, with its 20% market share, commands 3rd position in the regional market.

According to Munif, Samsung “has been the pioneer in introducing the era of digital convergence to the MEA consumer,” through its popular, innovative and intuitive products. Among its recent accomplishments, Munif cites Samsung’s key role in introducing “the dawn of smart home technology in this region, by displaying the first home networks in collaboration with Etisalat.”

Universal appeal

Although Samsung strives to achieve a universal image (at IFA 2006, a central section of Samsung’s expansive hall featured a display of “lifestyle concept” rooms, including Scandinavian, Asian and Mediterranean interior designs, to highlight the ease with which its digital products blend seamlessly in any home setting), partnerships play an increasingly significant role in the company’s corporate strategies, and Samsung has not missed the opportunity to draw on its two decades of experience in the Middle East when it comes to branding. “Samsung has a predominantly centralized approach to marketing; however, we do have an effective mix of global and local marketing campaigns,” explains Munif. “This ‘glocal’ marketing approach touches the local sentiment but does not compromise on global brand equity. A very good example is the upcoming Doha Asian Games campaign, for which Samsung has created an entirely local campaign for its global flagship ‘Bordeaux’ LCD TV.”

Samsung MEA may be part of a global brand, but according to Munif, MEA’s ultimate commitment is to its local end users:

“Our goal is make Samsung the most preferred and loved brand in the region. We aim to achieve this by focusing on our consumers’ needs, and delivering localized products and solutions to fulfill them.”

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Editorial

Statement of intent

by Yasser Akkaoui
written by Yasser Akkaoui

When it was announced that we were expanding Executive’s content to cover the MENA region “from Morocco to Iraq,” many people asked if we were “evacuating” to Dubai. It must be made clear that this was never our intention. Executive is a Lebanese magazine that will develop around journalism, not advertising – and Lebanon has always been a hub for serious journalism.

Yes, we will be building a solid network of business and economic analysts, experts and reporters throughout the region to produce what we hope will be the most authoritative and compelling business writing in the Arab world, but by rooting Executive in Lebanon, we demonstrate our commitment to our trade and to our country, in whose survival we have always believed.

Our expansion is much like that of other Lebanese industries, such as advertising, contracting, banking and finance, which outgrew Lebanon’s geographic limits and now serve broader economic centers while remaining essentially Lebanese. Our readers, in and outside Lebanon, can now access serious business journalism as we respond to the demands of the regional entrepreneur.

So it is out with the micro view of Lebanon and in with the macro take on the region. We will look at all the nations of the Arab world and chart the pace and level of change therein – be it fiscal, commercial or economic – and monitor how these nations adapt to internal and external pressures to implement key social reforms to improve quality of life and spur economic growth.

The Middle East is at the forefront of global economic and political activity, buttressed by the twin giants of the Europe and Asia. Yes, it has been marred by conflict and too often defined by religious dynamics, but it has much to contribute. This, for us, has become the story.

As we chart the successes and failures, the innovation and stagnation, the booms and the slumps, we will inspire many but no doubt aggravate a few. Some will find our style of journalism abrasive, but we wouldn’t be true to the Executive brand if we were not committed to objectivity, transparency and honesty.

This much we owe our readers.

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Lebanon

Running on Empty -Beirut‘s car market kaput

by Executive Staff
written by Executive Staff

The Lebanese car market had its worse summer in decades thanks to the war and a two-month sea blockade, with the number of new registered cars dropping 81% in August compared to the same month last year. The sector is only slowly clawing its way back, with sales down 41% for September. With the economy running on half empty, tough times lie ahead.

“The car market is in complete chaos right now, millions of dollars have been lost,” said Samir Homsi, President of the Association of Car Importers in Lebanon (ACIL) and CEO of Impex Trading, the local representative for Chevrolet and Hummer.

Car dealers had high expectations for the summer, with 1.6 million tourists expected to visit the country and the economy picking up after a sluggish 2005 that was marred by a spate of bombings following the assassination of former Prime Minister Rafik Hariri in February.

“We were expecting the best summer ever in Lebanon,” said Charbel Abi Ghanem, marketing manager for Rasamny Younis Motor Co. (Rymco), the dealer for Nissan, Inifiniti and GMC. “Our hopes in the sector were high, believing that over 20,000 units would be sold this year.”

Until mid-July, sales had increased by a solid 4% with 11,624 new vehicles registered, of which 10,898 were passenger cars and 726 commercial vehicles, according to ACIL.

But with the outbreak of war, the economy at a standstill and up to one million people displaced, many dealers were forced to close or operate with a skeleton staff. Sales consequently plunged, with the number of new cars registered in August decreasing to 302 compared to 1,550 in August 2005.

Nagy Heneine, manager for BMW at Bassoul-Heneine, said July 2005 sales had been $7.6 million and until the war started, $3.5 million for July this year. “Business was stunning,” he said.

Expectations dashed

Business worsened in August however, with only $390,000 in sales compared to $5.8 million for August last year.

“We expected to sell 150 BMWs in the last two months, but September sales were close to August’s,” Heneine said.

Other dealers had a similar story. Negib Debs, sales manager at T. Gargour and Fils, the sole agent for Mercedes and DaimlerChrysler, said the company expected to have sold at least 70 cars this summer—over $5 million in sales. The company sold 90 vehicles between January and August this year.

But when Israel imposed a 56-day air and sea blockade on Lebanon, ships containing cargos of new cars had to dock elsewhere, adding extra costs to dealers.

“There were 117 BMWs coming to Beirut, and had to be returned to Genoa and then to Germany. We had to pay for all the port expenses,” said Heneine.

Due to the unpredictability of the situation, Debs said Gargour cancelled orders for 100 vehicles.

Rental woes

Rental car companies, which account for between 30 to 35% of overall car sales, were also badly affected. Tony Gebran, marketing manager at City Car, said July and August usually account for 75% of annual rentals, but instead resulted in tens of millions of dollars in losses for the sector.

Until the war, City Car had experienced 30% growth in the first quarter and 40% growth in the second quarter. “If rentals had stayed like this we would have had nearly 50% growth this year,” said Gebran. He added that the company had to cancel orders for new vehicles and is now working at 50% capacity, slashing fees to buoy rentals.

Cancelled orders by rental companies also put a strain on dealers’ marketing strategies, particularly as new models were slated for launch in the fall.

“We were expecting to launch four new models this year,” said Nadine Azar Ghostine, marketing manager at Gargour. “We will introduce nothing before the New Year as we have to sell the older models.”

A biannual Beirut motor show that had been organized for November has also been cancelled.

“Lots of people wait for the motor show to buy cars. It would have been a peak sales period for us,” said Abi Ghanem.

Scrambling to recover

Dealerships are consequently scrambling to make up for lost ground. Promotional campaigns are also underway to get rid of the 2006 stock by reducing prices, lowering interest rates, offering extras, and entering into loan agreements with banks.

The price of a GMC Envoy, for instance, has been slashed from $33,500 to $29,500. “So we practically have no margins,” said Abi Ghanem. “We will forget about the brand and go for the hard sell.”

Such a strategy appears to be working, with sales picking up slightly in September. According to ACIL, the number of registered vehicles decreased by 41% compared to September last year, from 1,187 registered vehicles to 691.

But with dealers only getting 6-8% net margin on each vehicle sold, Heneine said dealers are not able to drop prices significantly. He believes the onus now lies with the government to help jumpstart the sector.

“The government should take immediate action as they are also affected by reduced revenues from customs, taxes and registration. They should remove registration fees—currently 7% of a vehicle’s cost—as it would help hesitant buyers,” Heneine said.

Although after-sales have returned to normal, in the medium- to long-term, dealers will struggle in the face of sluggish economic growth and rental companies unable to pay back loans.

“The worst thing is that even though the war has finished, people have lost confidence in the country,” said Heneine. “People with purchasing power have left—the ones that usually buy luxury brands—and are not coming back. It’s a long-term disaster.”

Bassoul-Heneine has resultantly scaled back annual sales predictions of BMWs from 740 units to between 250 and 400.

Some optimism remains

Higher oil prices, which spiked due to the sea blockade, have also affected sales of larger vehicles. Debs said that Mercedes with V8 engines had previously accounted for 60% of sales but has dropped to 25% after the war, with higher demand for V6 engines.

Despite the gloomy outlook, however, some dealers remain optimistic.

“The situation here is unstable, and people would rather put their money elsewhere than buy a car. But with Ramadan and tourists from the Gulf coming, the economy could pick up,” said Layal Karam, PR coordinator at Rymco.

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Society

Putting money where the mouth is – Lebanon’s boutique foods

by Executive Staff
written by Executive Staff

Lebanon, with its limited, varied terrain and lack of cheap labor, will never be an ideal environment for mass-production. However, Lebanon is ideally positioned to “go boutique.” There are already boutique hotels and Lebanon is considered a boutique wine producer, so why not other boutique products? Why not, indeed. Local entrepreneurs are catching on, and are capitalizing on Lebanon’s strengths—its climate, its educated workforce, and its historic ties with Europe—and producing high-quality fine foods.

In the case of Le Ferme St. Jacques, a duck farm nestled alongside a monastery in the mountain village of Bechtoudar and the Arab world’s only producer of foie gras and gourmet duck products, the farm was developed in 2001 as a pilot project to help in the revival of the northern economy.

The entire operation at St. Jacques could be called a French import. The staff was trained in France, all of their equipment was purchased there, and every three weeks, Air France flies 2,000 1-day-old ducklings into Rafik Hariri International Airport for delivery to the farm.

“The ducks need to be kept at an altitude of 1000m,” explains Jihane Richa, sales and marketing manager at St. Jacques. “Lebanon is the only country in the Arab world with a suitable climate.” As the sole regional producer of fine duck products, demand is high from across the Arab world, with Dubai and other Gulf states making up the primary export market.

Expansion plans

The farm, limited by its small size, has not yet fully exploited its commercial potential, but there are plans to expand and open similar farms in other villages in the north. In the meantime, St. Jacques has successfully achieved impressive secondary objectives—a solid reputation for high quality, brand awareness, ever-increasing exports across the region, and demand far higher than what they can supply.

This last point will be especially true over December of this year. The war prevented St. Jacques from bringing in the extra ducks it had ordered to meet the holiday rush.

“Last year, we didn’t expect so much demand over Christmas, so this year, we were really prepared. But the ducks came late—they won’t be old enough in time,” notes Richa wistfully. “We’ll be able to deliver for Christmas, of course—but not the way we wanted to.” The offset in timing means St. Jacques will have a large production in January and February instead, but Richa is confident that demand will be high enough to absorb the surplus.

Despite the delayed arrival of new ducklings, overall, the farm’s remote location and niche market meant it suffered less than many other businesses during the war. “We only stopped production for four days when the war broke out. I left for Morocco, and all of a sudden I was getting phone calls from restaurants in Faraya wanting to place orders,” recalls Richa. “We closed again after the attacks on Jounieh, but only briefly, to be sure it wasn’t escalating. Throughout the war, we were delivering to customers.”

“We’re going ahead confidently,” Richa affirms. “At St. Jacques, we’ve already faced a major disaster this year with the avian flu scare—in the end, everything went great. Any company that knows where it’s going can get through these times.”

Locally smoked salmon a hit

The inspiration behind Salmontini, whose owners produce the only domestically-smoked salmon in Lebanon, came in a far more casual manner—co-owners Hussni Ajlani and Joe Bassili met at a dinner party, and over the course of the evening, Bassili came to tell Ajlani how he was smoking fish in the mountains using the traditional Scottish methods. Ajlani was intrigued, and asked, only half-joking, “So, when shall we start a House of Salmon together?”

From there, the idea took off. Salmontini—the House of Salmon—opened its doors downtown in November 2001 and became a multi-million-dollar business. However, after the tumultuous events of 2005, the changing character of downtown towards a younger, most tourist-heavy crowd and the dominance of Lebanese restaurants in the area, Salmontini moved to its current location in Ashrafieh. “We are a classical restaurant,” explains Ajlani. “We need a location where we are less affected by change. Downtown moves too fast. We need a place where the restaurant can stay and stay. We hope Salmontini will still be here in 40 years.”

According to Ajlani, the overwhelming majority of new customers are unaware that all of the salmon on their plates is prepared at Bassili’s smokehouse in Hayata—and they are proud when they learn this. Approximately three tons of salmon are imported fresh each week from Scotland (it is a point of pride for Salmontini that none of its seafood—and especially none of its salmon—is ever frozen), brought up to the mountains for smoking, then sent out to both the original Salmontini in Beirut and its second outlet in Dubai, which opened in the summer of 2006. In addition, products can be purchased directly from the Salmontini boutique, and several caterers and gourmet supermarkets stock their fish as well (though not under the Salmontini brand).

The Dubai opening was particularly fortuitous considering this summer’s events, providing income while the Beirut restaurant sat empty. Throughout the war and after, Salmontini was unable to import its fish to Lebanon, and forced to close its doors in the middle of what ought to have been its high season. Temporary arrangements were made to bring fish from Scotland to Dubai directly for the duration of the blockade.

“As soon as the airport opened, we started up again. But between the loss of income, salaries, and rent, the war cost us about $25,000,” says Bassili.

Future plans on track

However, Bassili insists that none of their future plans have changed. Salmontini has already hired realtors to scout for a location in London, the site of their next expansion tentatively scheduled for next year.

“We’re here to stay, and we’re ready to lose money if we have to. But things are picking up again. We already have parties booked for Christmas. Salmontini is a unique concept in the world, and people here appreciate that,” Bassili notes.

While the foods produced at St. Jacques and Salmontini are unquestionably gourmet, both outfits are keen to stress that their products are affordable, and not limited to super-wealthy consumers. The ‘elite’ status of these products is derived not so much from their price tags, as from the rigorous training and production standards maintained in their creation.

The potential success of such enterprises has already been proven in Lebanon, through its fine wines, sweets, and other high-end products exported across the globe. Although Lebanon’s varied climate makes mass-production challenging at best, conversely, it means that almost any specialized product can be cultivated in some part of the country—a unique claim in the Arab world.

When asked if he is optimistic about the future of Salmontini—and other similar ventures in Lebanon—Bassili responds with a resounding, “Yes!”

“I’m waiting for the stock of INERGA to run out—they’re too easy to fire.” Bassili laughs. “We have a very different sense of humor in this country, no? Honestly, I’m very optimistic. We have to shake off the dust. If you want to live in this country, you have to be able to deal with these situations and move forward.”

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Society

Controversial billboards on airport road – Hizbullah’s ad campaign

by Executive Staff
written by Executive Staff

In the aftermath of its 34-day war with Israel, Hizbullah decided to launch its first-ever full-scale PR campaign: the “Divine Victory” blitz. The slogan was emblazoned on hundreds of billboards, primarily in the South, the Bekaa and the southern suburbs of Beirut, in a blissful union of militancy and marketing.

The contract was won by a team from Idea Creation, headed by Mohammad Kawtharani, the 30-year-old artistic director who coined the “Divine Victory” slogan. The campaign would have cost around $400,000, but the agency and the billboard companies offered their services for free. “So many companies refused money for their billboards. They said, ‘This is for Sayyed Hassan, this is for the muqawama—have it,’” explained an exuberant Kawtharani. Today, the slogan can be seen set against images of martyrdom and Israeli humiliation on 100 15x5m unipoles and 2,000 smaller billboards—a total of 12,000 m2 of printed area.

“We realized in the beginning that on the military and political levels, we were about to achieve victory,” Kawtharani says from the agency’s new offices in Haret Hreik, just a stone’s throw from the rubble heap that remains of its former location.

“We also saw the party unifying under the leadership of Sayyed Hassan Nasrallah. So we started linking his charisma to the victory. You know, ‘Nasrallah’ in Arabic means ‘divine victory,’” he adds.

Not just for Shia anymore

They emphasized red in the billboards to “signify the huge amount of blood” spilled during the war and highlight its civilian casualties, which Kawtharani calls the “real cost of the war.” The thin line of white line running across every image is meant to link the harsh realities on the ground with the ethereal forces of the divine. The green symbolizes the victory of resistance, which succeeded in “transforming death into life.”

Although Hizbullah was marketing the resistance long before this summer—Al-Manar TV station, local print media, and three billboards in the South and Dahieh owned by Hizbullah’s Martyr’s Institution were the crux of its public relations strategy—this is the group’s first attempt to market outside of its core constituency.

“It’s not only important that we won the war, now we have to maintain the vitality of this victory … and prove that the resistance is for all Lebanese,” Kawtharani says of the main objectives behind the campaign.

To communicate the national—as opposed to exclusively Shia—character of the “Divine Victory,” Idea Creation chose the images for each billboard according to its location and the demographics of its target audience.

“We chose different photos for billboards in the North than for the ones on the airport road,” Kawtharani says, “Like for one in Jounieh, we put a Lebanese Army soldier next to a resistance fighter, meaning the resistance is not just Muslim.”

Multi-media campaign

In addition to outdoor advertising, Idea Creation employed three other marketing tools in its campaign: printed pamphlets, banners, and personal items like flags, caps and pins. These elements of the campaign were also oriented towards specific target audiences.

The English-language banners proclaiming “Made in the USA” and “Extremely Accurate Targets” jutting from the rubble in Dahieh, for example, were designed for Western consumption.

“We tried to use the language of American media ironically there,” Kawtharani says, “So Western [news consumers] absorb a double-meaning.”

While the campaign certainly succeeded in getting attention both at home and abroad, it remains to be seen whether it will prove effective in attracting new supporters to the Hizbullah camp or in shoring up the support of disillusioned Shia. Now that domestic political tensions have once again replaced an external enemy as the biggest threat to Lebanon’s stability, the more important question may be whether the campaign was designed to help unify the Lebanese people, or as an opportunistic attempt to stir the sectarian pot.

“No one is disputing the costs of the war, but we are trying to recover now and we have billboards reminding us all along airport road,” says an executive from a mid-size advertising agency in Lebanon who preferred to remain anonymous. “If we want tourism and investor confidence to recover, we cannot show these kind of images.”

Kawtharani dismisses criticism on this count as beside the point: “Our priority is not to attract tourists back to the country—we are not trying to promote commodities, but to show the reality on the ground.”

The same executive said that the marketing campaign has also failed to consolidate increasingly fragmented public opinion within the Shia community.

“A lot of moderates in Hizbullah are thinking, ‘Why do we need to rebuild our homes every four years?’ The campaign pushed them away, and for the rest of the Shia, Nasrallah could have made a TV appearance and had the same effect because they believe everything he says anyway.”

Battle in the media, not the streets

Another executive speaking on condition of anonymity, from the Lebanese branch of a multi-national advertising franchise, agrees that the campaign did not sway public opinion. Although he is optimistic about what the strategy means for the future of the Lebanese political environment, his optimism is based on a kind of tenuous logic that has proven dangerous in the past.

“Effectively, if this is fine,” he argues, “Then Hizbullah will have to accept another political party mounting a similar campaign that they might not like, and they can’t get upset about it.”

However, he also observes that a slick Hizbullah marketing campaign, though controversial, may mark a positive change in the domestic sectarian discourse:

“It is offending a lot of people, but I’d rather the debate happens this way than for it to happen on the streets with riots and demonstrations.”

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Mohammed al-Rumaithy – Help from the UAE

by Executive Staff
written by Executive Staff

Last month, the UAE Program to Support and Rebuild Lebanon handed over the keys of 168 repaired schools to the Lebanese government. Executive talked to the program’s director, Mohammed al-Rumaithy, about the logistical aspects and political overtones of reconstruction in Lebanon.

E When exactly did the program begin and what are the main projects you have been working on in Lebanon?

It started right at the beginning of the war, but at that time it was only focusing on humanitarian aspects like food and medicine. This continued until the end of the war, when the UAE decided to participate in rebuilding—and in particular, rebuilding schools—because they believed that this was a very important project. The other major aspect of our work is de-mining and bomb removal. The UAE finished its first de-mining project here two years ago, so it was natural for us to resume this kind of work—although this time the problem of bombs is greater than mines, which is a new situation for Lebanon.

E What stage are you at in terms of achieving your objectives?

On October 18 we handed over the keys for 168 schools to the Lebanese government. Another 37 will be ready by November 18 and a further 11 by December 11. These were all schools which weren’t actually hit by rockets, but which were used for other purposes during the war and needed repairs and other work. There are two schools which were destroyed by missiles, and we estimate that we will have rebuilt these completely by December 2007. We’re satisfied with the result, the government is satisfied and so are the people in the south.

E How closely are you working with the Lebanese government on these projects, and how did you organize to rebuild the schools in the first instance?

We first went specifically to the Ministry of Education, met the minister and were given all the information on the situation. But from then on it was all on us to decide how we would work and deal with contractors, and so on. The government had nothing to do with the project field-wise, although they were helping us with statistics and logistics whenever we needed them. They asked us to go away, do the project and then give them the keys to the schools.

E How is the project funded?

It is all funded by the UAE government, except for humanitarian aid which is funded by donations from the people of the UAE.

E Is there a budget?

No, there is no specific budget, but the government is always prepared to support us if we require extra funds. At the start it was extremely difficult to budget because we didn’t know how many schools had been hit, and in the chaos immediately after the war there were no reliable statistics for us to budget from. The same was true for the de-mining and bomb removal: it was difficult to know how many cluster bombs or mines needed to be dealt with.

E How much has been spent on the program so far, whether from the UAE government or from fund-raising?

It’s a significant amount.

E What are the major logistical problems you’ve encountered when working in South Lebanon?

There have been no significant problems, although of course access was difficult at the start because of the destroyed bridges. We were also very squeezed for time as we knew that the government had told parents that the kids would be going back to school on October 16, so we only had 30 days. When we heard what the Lebanese government had promised, we had to run around even more and cover as much ground as possible every day. I think what we did so far has been appreciated by the minister and the government.

E Do you use private Lebanese contractors to rebuild the schools or do you ship in any staff from the UAE?

Only the engineers are from the UAE, the rest are Lebanese. We went directly to local contractors in the South, which is easier for logistical purposes and they know the area well already.

E Did you initially want to do more reconstruction projects in Lebanon, but were limited only to the schools?

The government of the UAE is ready to help in any way, but, of course, we don’t want to take over other people’s work. When we first came, many countries and NGOs were on the ground, and to do the job properly you have to focus on one thing. You cannot come and say “I want to do everything.” So when we made it clear that the UAE would rebuild the schools, everyone knew that. I think what we’ve done so far, and are still doing, has touched the Lebanese people. If it’s rebuilding schools, then it affects kids; if it’s removing mines and bombs, then it affects farmers. In the south, these bombs are preventing everyone from moving around—farmers, children, everyone. Even moving from house to house becomes impossible. So our projects really touch the daily life of the people. There may be more on the way, as now we get requests from the ministry about other work to do. We are tackling each request at a time, and we may increase the number of projects, but it will not be by much.

E How does de-mining actually work on the ground in the South? With so many NGOs and other organizations down there, are you given a specific section to clear up?

The main two players are the UN and the Lebanese Army. They are coordinating all the de-mining and bomb removal efforts and trying to solve this problem as quickly as possible. You tell them what your capacity and budget is and they will nominate a specific piece of land for you. The same goes for other countries that come to help. There are a lot of countries participating.

E How much work is there left to do in terms of de-mining and bomb removal?

Lots. We will not be finished until September 2007. I think there are more than 2,000 mines in Area Six, which is north of the Litani. And regarding the bombs, we’re talking about millions. But it’s a good opportunity to train our officers and [non-commissioned officers], as these conditions produce the best results from training.

E Since the end of the war, the issue of reconstruction has naturally taken on some political overtones. Many people think the various groups are trying to win the support of local people through rebuilding projects. Do you feel as if you are involved in this political aspect of things?

Not at all. We’re not politicians and my country has never in its history mixed politics with help. We have been working in many countries—in South America, in Africa, everywhere—and when we come to help our brothers in Lebanon it’s for help and nothing else. The program works along specific principles and applies to the whole of Lebanon. It does not leave anybody to one side because of their religion, ethnicity or beliefs. Because the people here know that, they welcome us and try to help us. The UAE has nothing to do with politics and this project is solely for the Lebanese people.

E What has been the feedback from people in the south towards the program? Has there been any antagonism?

It’s been positive. We get support and positive comments, and we know that we are giving from the heart and they are receiving from the heart. We’ve given to everybody and without having to particularly plan it, especially in the first few weeks when we went everywhere to help. We never encountered any negative reactions or rejections.

E How do you ensure that this reconstruction aid money is going to the right place in the South, and not being channeled off along the way?

Well, if I understood you correctly, I’m not a security agency to check up on the contractors I employ. I send in my engineers, they do the estimate of how much something will cost, and I go around the contractors and nominate the one who offers the best price. I don’t check up on contractors and if I did we would never ever finish this project.

E Apart from the schools and the mines, what other projects do you still have to complete?

The program is building a brand-new hospital close to Shebaa, which a consultant is working on now in cooperation with the Lebanese Ministry of Health. A tender will be open soon. We’re also repairing two existing hospitals in Marjeyoun and Bint Jbeil. The latter needs a lot of equipment but luckily it wasn’t touched during the war, so we will simply furnish it. The hospital in Marjeyoun is working but needs a few improvements.

E And what about Beirut?

As I said, the program applies to the whole of Lebanon, and in Beirut in particular we’ve been helping at Ouzai harbor, which was damaged by bombs during the war. About a month ago [in September] we distributed checks to 91 fishermen and 315 boat owners in the harbor, to help them get back on their feet. A few buildings in the harbor were destroyed too, and we’re coordinating with the local people to rebuild them. There are only four or five buildings, but they’re important for the people who work in the area. This should take no longer than two months to finish.

E Will the program keep a permanent presence here?

I think we’ll be finished by December 2007. The people working on the program won’t remain in Lebanon that long, so once we make sure that the remaining schools are contracted it will be a matter of follow-ups and payments that can be done through the embassy.

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The forgotten war

by Executive Staff
written by Executive Staff

When Americans talk of “the war” these days, they mean the one being fought in Iraq, a war that has been percolating for three and a half years. But Americans – and a broad multinational coalition — have been fighting another war, in Afghanistan, even longer than in Iraq. As of last month, NATO assumed the control of operations in Afghanistan.

For most of the American public, the Afghan conflict was almost forgotten for a while as the violence unfolding in Iraq grabbed most of the headlines, and, to be sure, the priority of the Pentagon.

But more recently, the Taliban has been making a not-so-discreet comeback (along with the resurgence of opium), waging attacks against Afghan government troops and coalition forces. The almost-forgotten conflict is once again making headlines.

The Bush administration decided to wage war in Afghanistan shortly after the September 11 attacks on New York and the Pentagon, in order to oust the Taliban who ruled the country and offered unlimited support to Osama bin Laden and his al-Qaeda terrorist organization. So what happened? What went wrong? Why did the United States get it so wrong in Afghanistan? Why was there such a misjudgment in the war planning? The answers to all the above questions may be found in looking at who the primary architects of the war were. Indeed, they are the very same ones who planned the Iraq campaign: Secretary of State Donald Rumsfeld, his deputy Paul Wolfowitz, Vice President Dick Cheney and a handful of carefully selected close and trusted subordinates. The president himself was not interested in the small details. Bush was more of a “show me the big picture” type of leader. As was the case in Iraq. Do we not find a similar modus operandi in the two conflicts? Go in light, go in quick, cause the maximum damage to the enemy in a Rumsfeldian blitzkrieg, but then completely fail in post combat planning. Although different in its execution, in many ways the Iraqi campaign was a mirror of the Afghani one. Granted, the terrain is very different; Afghanistan is made up of sharp mountain ridges, littered with deep caves where al-Qaeda and the Taliban could hide from heavy US aerial bombing and artillery. On the other hand Iraq is mostly flat and American tanks were able to race from the Kuwaiti border to Baghdad in record time. In studying both conflicts in Iraq and Afghanistan – as undoubtedly military historians will do in the years to come, hoping to extract lessons of what went right and what went wrong — what is already emerging is that Rumsfeld wanted quick victories to be obtained through the use of special forces, light, rapid moving units, skip the details. Full speed ahead and damn the torpedoes. In years to come, historians will scrutinize every document, every minutes of war preparation meetings, every inter-departmental memo and pre-war document as they become declassified. What they will most likely conclude is that while the initial planning for the war-– the actual battle plans for the invasion of both Afghanistan and Iraq were brilliantly executed — the post-war administration of both countries –- now under US tutelage and therefore the legal and moral responsibility of the United States, was utterly disastrous.

And the reasons? Lack of attention to what happens the first day after combat operations are over. James Fallows, a noted Atlantic Monthly national affairs correspondent, notes in his book Blind into Baghdad that the Bush administration messed up in Iraq by failing to give attention to details: “It will be years before we fully understand how intelligent people convinced themselves of this. My guess is that three factors will be important parts of the explanation.

“One is the panache of Donald Rumsfeld. He was near the zenith of his influence as the war was planned. His emphasis on the vagaries of life was all the more appealing within his circle because of his jauntiness and verve. Fallows goes on to say: “The third factor is the nature of the president himself. Leadership is always a balance making the large choices and being aware of details. George W. Bush has an obvious preference for large choices. This gave him his chance for greatness after the September 11, attacks. But his lack of all curiosity about significant details may be his fatal weakness. When the decisions made during this time are assessed and judged, the administration will be found wanting for its carelessness. Because of warnings it chose to ignore, it squandered American prestige, fortune, and lives.”

While it is important to point out that Fallows was writing about Iraq, the same can be said of Afghanistan. In both instances, the US did not go in with enough manpower to guarantee that life in Kabul as in Baghdad could return to normal once the actual fighting phase ended. In his research, Fallows found that, “According to the standard military model, warfare unfolds through four phases: ‘deterrence and engagement,’ ‘seize the initiative,’ ‘decisive operations,’ and ‘post conflict.’ War College directives clearly state that planning for Phase IV (post combat) ‘had to start as soon as possible,’ well before Phase III (‘decisive operations’).”

This means that planning for the post-combat phase should begin far ahead of the start of the war. This did not happen in Afghanistan and it did not happen in Iraq. In both cases, the signature on the architect’s blueprints are the same.
 

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